Today, the European Commission has fined six financial institutions for a total fine of $2.3 Billion USD, a record fine. This takes the total tally to $6 Billion in fines. It makes one wonder, at what point do the fines get so high that the activities they are being fined for are not net profitable? From Reuters:
The fines by the Commission, which along with authorities around the globe has been examining the manipulation of London interbank offered rate (Libor) and its euro equivalent Euribor, takes the tally of penalties related to the scandal to almost $6 billion.
Confirming what a source familiar with the matter had previously told Reuters, EU Competition Commissioner Joaquin Almunia said he had been shocked at the scale of the scam and was sending a clear message that Brussels would fight and impose sanctions on cartels.
Deutsche Bank, which has yet to be fined by U.S. and UK regulators as part of separate investigations into benchmark interest-rate fixing, received the highest fine of 725.4 million euros.
Germany’s largest lender and RBS were fined for their involvement in both the Euribor and Libor cartels.
Also fined were JPMorgan and Citigroup, France’s Societe Generale and UK-based brokerage RP Martin.
Swiss bank UBS and Britain’s Barclays avoided fines of 2.5 billion euros and 690 million respectively for revealing the existence of the cartel.
U.S. and French banks were penalized for the first time in a scandal in which traders fiddled rates used as a reference point to price around $400 trillion worth of products worldwide, from derivatives to mortgages and student loans.
Some banks declined to settle with the EU. France’s Credit Agricole and UK-based HSBC are disputing allegations, while the role played by UK-based brokerage ICAP remains under investigation.
JPMorgan has only settled allegations relating to yen-denominated Libor, not Euribor.
Almunia said the Commission would continue to investigate collusion allegations in other benchmarks, including the Swiss Franc currency and foreign exchange markets.
“This will not be the end of the story, neither for interest rate derivatives nor for the manipulation of benchmarks,” Almunia told a Brussels news conference.
“And one of the areas where, as you know, we have received some elements of information that we are looking at very, very carefully is forex, forex markets and the relations with forex benchmarks.”
Every new layer of scandals seems to reveal another, now the DOJ has an investigation underway into the manipulation of WM/Reuters Forex rates.